Creating Value-Based Incentives For Primary Care

In a remarkable recent interview, Donald Berwick MD, Administrator of the Centers for Medicare and Medicaid Services (CMS), eloquently described his vision of value-based health care.

Paying for value is an incentive…The underlying idea of improvement is that American health care, historically built in fragments, often cannot achieve for patients what it really wants to achieve…Health delivery system reform refers to really reconfiguring care into much more seamless coordinated-care operations so that people, especially those with chronic illnesses, experience continuity of care over time and space.

So when patients come home from the hospital, there is a smooth handoff, and all the necessary information follows them. When they are seeing a specialist, that specialist is coordinating care with their primary care doctor.

This description probably resonates with most health care professionals as a better approach than the current paradigm’s fragmentation and lack of continuity of care. But as with many things in health care, it won’t be easy getting to a value-based health care approach in Medicare and Medicaid. Despite wide acknowledgement that fee-for-service perpetuates our health system’s most undesirable characteristics, the mainstream of American health care seems stuck. One wonders whether CMS can rise above the special interest lobbying, get beyond the interminable pilots and decisively act on payment reform with the conviction required to help save health care from itself.

Still, the idea of value-based reimbursement begs questions. What payment methodology will incentivize the best quality and most efficient care? What path can take us there?

Primary care should be at the heart of this discussion. While much of specialty care has been overvalued over recent decades, the undervaluing of primary care has weakened its moderating influence over downstream services, with dramatic cost growth that now threatens all health care and the nation.

Let’s recount what we know about primary care and its impact on specialty services.

  1. More primary care in a market lowers overall health care cost.
  2. Primary care physicians (PCPs) who aren’t rushed with patients tend to develop stronger patient relationships and handle problems immediately, making fewer (unnecessary) specialty referrals. By contrast, volume-based primary care reimbursements that incentivize shorter established office visits increase  cost.
  3. Fee-for-service reimbursement encourages more services, independent of appropriateness, and so is antithetical to medical homes that focus on ensuring appropriate care throughout the continuum.
  4. Over the past 20 years, a specialist-dominated political process has driven an enormous disparity between primary and specialty care reimbursement. Low primary care reimbursement has resulted in a primary care labor crisis.
  5. When referrals are made, an open line of communication creates greater specialist accountability to the PCP, moderating unnecessary services. This approach appreciates PCPs as full-continuum patient advocates and guides rather than as “gatekeepers.”

The lessons above constitute a basis for a revised approach to primary care payment. The goal here should not be to simply pay primary care physicians more for the same work, but to change medical management in a way that increases efficiency throughout the continuum. Here are guidelines that should be reflected in any new primary care payment scheme:

  1. Separate Valuation Mechanisms. The work of primary and specialty care physicians can be very different and must be evaluated differently, through separate mechanisms.
  2. Valuation Absent Financial Conflict. Specialty physicians have a financial interest in how primary care physicians practice, so should not dominate the determination of primary care reimbursement.
  3. Financial Parity. To rebuild our primary care workforce, generalist physician income should be on par with average specialist income.
  4. Incentivize Appropriateness. Payment should incentivize appropriate care and, unlike straight fee-for-service or capitation, avoid encouraging the delivery of unnecessary care or the denial of necessary care.
  5. Incentivize Teamwork. Payment should reward population-level health improvements that can only be achieved through more primary-specialty collaboration and accountability. Of course, this assumes that physicians have better access to comprehensive patient information.
  6. A Focus on Value. Payment should be based not only on a service’s “inputs” – both inside and outside the patient encounter – required to accomplish care, but on its value. Care valuation should include patients, purchasers and health economists as well as clinical practitioners.
  7. Encourage Investments for Better Performance. Payment should encourage investment in technologies and programs demonstrated to improve quality or safety at lower cost.

Payment that reflects these elements would liberate primary care, organically reducing unnecessary specialty care, and saving money without reducing payment for individual specialty procedures.

Fixing primary care reimbursement is a critical first step toward healing primary care and the larger American health system. For this reason, CMS should consider these design criteria within the frame of Dr. Berwick’s vision, and move with all speed to change the way it pays for primary care.

This post first appeared at Health Affairs Blog on June 2, 2011. Copyright ©2010Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

Brian Klepper, PhD, is an independent health care analyst, Chief Development Officer for WeCare TLC Onsite Clinics and the editor of Care & Cost. His new site, Replace the RUC, provides extensive background on the issue.

David C. Kibbe, MD, MBA, is a Family Physician and Senior Advisor to the American Academy of Family Physicians who consults on healthcare professional and consumer technologies.

13 replies »

  1. Fee for service is going to be one of the main driving forces in the new “Doc in a Box” setting. The current trend towards Minute Clinics and other Retail based drop in clinics is not just driven by the convenience factor – A posted Ala-Cart menu of services most of which are under $50; is a big factor in the expansion of this business model.
    Got a Cold and just want to see “Someone” – Drop in and for $30 bucks they can give you the reassurance that you are OK and then help guide you to some drug store remedy that gives you some relief and peace of mind – A cheap date – much easier and cheaper than having to make an appointment with your local Doctor and then waiting for 30 minutes longer than you want – seeing the nurse for 5 minutes the Doc for 5 minutes and then paying?? Depending on your insurance or not
    Not sure that the traditional Doc would want to compete with this level of patient care even if they could – it’s time to layer the system and send the patients that really only need hand holding to a less than Physician Trained level of care – better for all and with the shortage of trained Physicians in this country – a needed addition to the system.

  2. It is true that “more primary care lowers overall health care cost(s).” And developing relationships based on trust with patients is key. Patients are more comfortable asking questions and, one would hope, more active in the care of their health. They must be supported in their quest for information/understanding. I found this helpful in forming questions for my doc: http://whatstherealcost.org/video.php?post=five-questions

  3. @Mr. Turpin,

    Sir, what you are proposing is downright evil. I am a physician, not a police officer. You are talking about penalizing people for NOT doing something that somebody thinks they should do. I think preventative maintenance helps some of the people some of the time, but I am not at all convinced it’s the thing for all of the people all of the time. The asymptomatically ill may cost us a lot, but they may also die suddenly and cost us nothing at all. We don’t know. They have the right to roll their dice and take their chances. Just like the rest of us do. What you are suggesting is downright totalitarian, be it fascist or socialist. Offering incentives? Good. Penalizing people b/c they don’t comport with the medical fad of the year? Bad.

    “This is why the private sector anchored by employer sponsored healthcare is the only hope of driving compliance based plans. ”

    This is they system that is failing us right now. Pwnd

  4. Safeway?

    If indeed 90% of obesity is “preventable”, then perhaps Safeway ought to stop pushing sugar and corn syrup and all other obesity inducing wares. And the funny part is that I am expected to pay for the low cost availability of these things and also subsidize tobacco, not to mention high cholesterol inducing cruelty and mass murder of farm animals. Is there any reason for me to pay for your affordable BBQ? Maybe I should demand that my subsidy is only applied to shoppers who can prove that they are not obese, at risk for obesity, and otherwise fit and healthy. Let the other irresponsible people pay full price for lard, pork-chops, white bread and soda.

    On a more pragmatic note, screening of any type does not prevent cancer. It just kicks the can down the road to Medicare to deal with Alzheimer and other cancers. And although screening may be free, is the treatment of cancer also free? Or do we just fire the newly diagnosed and let Medicaid take care of the nasty details?

    And generally speaking, how is this any different than risk adjusted insurance premiums and preexisting conditions? Other than making sure we flush out all preexisting conditions by compulsory testing and health risk questionnaires.

    And why is it that every solution to a perceived (or engineered) “crisis” always involves infringement on little people’s freedoms?

    And to MD as HELL point, why stop here? We can screen in utero and ask for compulsory abortions of imperfect fetuses. After all, why should you pay for my irresponsible decision to give birth to a sickly baby? And why stop there, maybe we can ask for means testing before having yet another welfare destined child…. Why should you pay for raising my baby when I am obviously incapable of doing so on my own money?

    Health care is like highways, not car insurance. I pay for you to have nice and safe highways and byways to drive on. Whether you are a safe driver or an irresponsible drunk driver, you have my highway money at your service. If you choose to misbehave, or if you have the misfortune of an accident, you will pay a personal price.
    If you get sick due to your excesses, or through no fault of your own, I will pay for your medical care, but the personal price is all yours – death, dismemberment, pain, suffering, loss of income and whatever else comes with major illness.

  5. We have a BINGO.

    Keep your hand off people’s freedom to die early and get sick from bad choices. The beauty of freedom is you can make different choices for your own life. You may live as you choose, the real American dream.

    Or,if you are going there to meddle and decree, don’t let people with certain genetic illnesses to propagate. Too expensive to allow them to pop out another preventable healthcare cost center.

    Whici is it?

  6. Then don’t ask me to pay for your care. If you drive the car with no oil and never fill the tires to the proper pressure, please don’t ask me to insure your vehicle. You espouse the great social contract of health care for all but like a classic European works council chair, you threaten to strike if we want to actually ensure that you are keeping your side of the bargain.

    Margalit, what is unreasonable about making sure a male between 50-55 gets his colorectal exams, prostate checked, cholesterol, fasting glucose and blood pressure. We see 50% of catastrophic claims being incurred by individuals who had not seen a primary care doctor in the previous two years prior to their illness — which in many instances could have been detected, prevented or mitigated – if the person had seen a physician. Can’t have your cake and your high BMI as well.

    This is not a violation of human rights, this is the right thing for humans. Given that PPACA now covers most of these at 100%, why not insist with 100% compliance to be eligible for the highest level of subsidies. What would you propose the Safeway when they found 66% of their diabetics were non compliant with their treatment plans?

    I know what they did and as a result, their healthcare costs have DECREASED year over year for the last several years. They did not back off. Au contraire ( I wish I could say this in Polish ), they got tough. The government will never ” get tough” and if they do people will complain. Or should we just ask people more politely.

  7. “If a male between 50-55 is not compliant with tests compulsory with his age band, he is denied subsidies.”

    Compliant? Compulsory?
    Then you wonder why people are uncomfortable with these things? I guess one “compulsory” thing leads to another……
    By the way, is there any evidence that “tests compulsory with his age band” reduce overall costs of health care, or are we just on a “patient-centered” power trip here?
    Even women in a previously communist country seem to take issue with “compulsory” testing

  8. PPACA will now allow employers the ability to create up to a 30% differential in premium contributions if employees do not choose to participate in population health management programs. If you read Zero Trend by Dr Dee Eddington of the University of Michigan, you can see how the prevalence of risk factors in patients correlates to consumption. The asymptomatically ill, chronic/non compliant and catastrophically ill are driving a huge percentage of the consumption of healthcare dollars.

    An anchor tenet to allowing the medical home to work is penalties ( lack of incentives ) for non compliant patients. If a male between 50-55 is not compliant with tests compulsory with his age band, he is denied subsidies.

    Patients and people change because a pain in their chest or their pocketbook. This is where employers must partner with providers. This is why the private sector anchored by employer sponsored healthcare is the only hope of driving compliance based plans. The government is simply not going to want to force that tough discussion where employers ( if they would stop worrying about disruption and start worrying about health improvement and compliance ) could partner with PCPs to radically reduce consumption and unnecessary treatment – preserving dollars for those who need it most.

    Healthcare is a partnership and there is an implied social contract that each side must abide. You cannot expect the provider to shoulder all the burden and no amount of EMR and disease management is going to supplant an old fashioned carrot and stick approach.

  9. Agree with doctors Mike and Craig. It is the sick patient who can most be incentivized to drive their healthcare experience if given access to the proper tools. This is where technology can step in to provide convenience in meaningful communication flow with healthcare providers.

  10. “Despite wide acknowledgement that fee-for-service perpetuates our health system’s most undesirable characteristics” Fee for service is the only thing that keeps it going. There is no incentive to do nothing and get paid nothing. You get paid to do something if you find something. If you never look you never find it and you never fix it.

    This piece is a bunch of Walden Pond fluff.

  11. Agree. It’s the patients we need to incentivize. Specifically, to take care of themselves and take an interest in their own health. Yet, nobody talks about this. Similarly, nobody talks about incentivizing parents to get their kids ready to learn in school. All responsibility is dumped on the teachers.

  12. As a primary physician I agree with most of the above, but I do believe that providing the proper incentives to me will never ever achieve the cost savings that would be realized from offering the proper incentives to my patients. Why is this never considered?